Money» United Spirits Shares Gain As Open Offer From Diageo Comes Along

Diageo looking at open market deal for 26% stake in United Spirits

Dailybhaskar|Nov 20, 2012, 12:15PM IST

New Delhi: Though British liqour maker Diageo has been in the news recently after they manage to acquire 53.4% of Vijay Mallya owned United Spirits, this time they chose to make an open offer to pick up 26% stake in the Indian liquor company. Diageo is known to take interest in picking up 26% stake at Rs 1440 a share, as per the offer document, for which tendering period starts from 7th January, 2013, and will be running till 18th January, 2013. This open offer would mean, that investors in the open market would be asked to sell their shares to Diageo, but market specialists say it would have little positive take aways for the copany, as the investors are not ready to let go of their holdings just as yet.

Nikhil Vora, managing director at IDFC Securities, told NDTV that the Diageo open offer was unlikely to succeed because investors are not looking to exit United Spirits right now. "Many investors have been on the fence here and that will change drastically. There will be a fair bit of investor appetite. I don't really see Diageo getting anything out of the open offer," he added. When the deal does finally get done with, what it will potentially do for Diageo is that the markets will expand for the UK based liquor major like never before. Alongside, it will also allow United Spirits' product range to up their 'premiumization' strategy, which still remains a core pathway of the United Spirits' product portfolio.

This US-Diageo deal however, makes it the largest acquisition deal since the Cairn Energy and Vedanta Resources transaction which took place last year. Diageo has been lookin for the United Spirits stake since 2008, but only recently did it finally go through.